Cut those costs!
Trying to reduce your outgoings can be a daunting prospect when you’re stressed by falling turnover and running out of cash. Hindsight being such a wonderful thing, you probably realise by now that you should have put the equivalent of three months overheads aside for that rainy day, arranged for the preparation of monthly financials and prepared a budget and cash flow forecast to predict your current predicament but what can you do now to alleviate the pressure?
- Reduce your drawings to the bare minimum. If this means cutting your personal outgoings so be it. Go through all your expenditure and prepare a simple budget and stick to it you’ll be surprised at how much you can save! Give your credit cards to a trustworthy friend or family member to prevent impulse buying – it’s better to be poor temporarily than go bust.
- Cut your staff costs where necessary. No matter how loyal your staff sometimes the interests of the few outweigh the needs of the many – there is no point in carrying on to the point where all the staff have to be made redundant. In addition, there may be easier alternatives such as reducing hours or contractors.
- Ask your landlord for a temporary rent reduction. Not easy to negotiate but many landlords are reasonable and recognise that it’s better to have some rent and an ongoing tenant than none. You’ll have to convince your landlord that you’re not a goner and that you do have a future but that you just need temporary relief.
- Watch your finance costs. Are your interest costs too high? Do you know what these really are or is the true finance rate well and truly disguised? Are your borrowings appropriate to your circumstances and properly structured? Are you borrowing too much because you’re poor at collecting your Accounts Receivable?